You can request a refund of VAT and pay it back later
Companies can request the VAT they have paid at the beginning of 2020 to be returned to them. In practice, the company requests a payment arrangement and will pay the returned VAT back to the Tax Administration later as part of the payment arrangement. The easiest way to request a payment arrangement is in MyTax. You can make a request starting 26 May.
VAT must be paid back later as part of a payment arrangement
By requesting a payment arrangement, you can get back the VAT that your company paid in January, February and March 2020. However, you cannot get back any late-payment interest that you may have paid on the VAT. Only the original VAT amount will be returned to you.
If your VAT period is a year, you can request 25% of your VAT for 2019 to be returned.
Please note that your company will not be able to permanently keep the paid-in VAT even if it is returned. As part of the payment arrangement, the company must agree to pay the VAT back to the Tax Administration at a later date.
You will also have to pay 3% of late-payment interest on the VAT amount. The late-payment interest is calculated from the original due date of the tax. The interest is automatically included in the payment instalments of the arrangement.
Example 1: A company has paid a total of €50,000 in VAT on the due dates 13 January, 12 February and 12 March. The company requests a payment arrangement in May and asks for the VAT to be returned to them. In June, the Tax Administration accepts the payment arrangement request and returns €50,000 to the company. The first instalment of the payment arrangement is due in September. The instalments include 3% of late-payment interest on the VAT, calculated from the original due date up to the date of payment.
All payment arrangements granted from 25 March onwards are subject to the eased terms. Read more about payment arrangements with eased terms.
How to request paid-in VAT back
You can request the VAT you have paid during 2020 to be returned to you by submitting a request for a payment arrangement. The easiest way to request an arrangement for getting back your paid-in VAT is to submit a payment arrangement request in MyTax starting 26 May. If you request a payment arrangement before 26 May, you will not have the option of asking for the VAT back.
In the payment arrangement request, select the option for requesting VAT paid in 2020 to be returned.
If you cannot submit a request for payment arrangement in MyTax, you can make the request starting 26 May by calling our service number 029 497 028 (Payment arrangements and recovery, limited service available in English).
Have you previously requested a payment arrangement with eased terms?
If your company has already requested a payment arrangement with eased terms, and you now wish to also request paid-in VAT to be returned to the company, you must make a new payment arrangement request by 15 June 2020. This will replace your previous request.
State in your new request that you wish for the VAT paid at the beginning of 2020 to be returned to the company.
Making a new request will not cause your payment arrangement to be delayed. The processing of requests concerning payment arrangements and paid-in VAT starts after the new legislation has entered into force, which is scheduled to take place in June.
Payment arrangement affects how your tax refunds are used
If your request for payment arrangement is accepted, it will affect any tax refunds you may receive from the day of acceptance until the end of the year. The Tax Administration will not use your tax refunds to pay taxes that are in the payment arrangement. Instead, the refunds will be paid directly to your company. However, tax refunds can still be used to pay tax debts that are not included in the payment arrangement. In addition, refunds will still be used to pay any other debts that are being recovered by enforcement.
Tax refunds will not be used on taxes that are included in a payment arrangement, if the arrangement was requested on 25 March 2020 or after.
You can also request the previous use of tax refunds to be cancelled
If you received tax refunds in April, May or June and they have already been used to pay your taxes, you can ask for the Tax Administration to cancel the use of the refunds. The refunds will then be paid directly to your company. There is a section in the MyTax payment arrangement request where you can ask for the cancellation of use of refunds. You will then receive any refunds that have been used between 25 March and 15 June. The changed legislation on returning VAT will enter into force in June. The exact date is not yet set.
However, tax refunds may still be used to pay any tax debts that are not included in the payment arrangement. In addition, refunds will still be used to pay any debts that are being recovered by enforcement.
Note: If you request the cancellation of use of refunds, the taxes on which the refunds were originally used will become unpaid again. You will also have to pay late-payment interest on the taxes, calculated from their original due dates. These unpaid taxes will be automatically included in your payment arrangement and you will pay them back as part of the arrangement.
Example 2: A company’s tax prepayment of €1,000 fell due on 23 April. In order to cover the tax, the Tax Administration used €1,000 of the company’s tax refunds.
In May, the company requests a payment arrangement and asks the Tax Administration to cancel the use of the refund. In June, the Tax Administration accepts the request and cancels the use of the refund on the prepayment that fell due on 23 April. The company receives €1,000 in tax refunds, but their prepayment instalment is now again unpaid and overdue. The unpaid instalment is included automatically in the company’s payment arrangement, and the company will pay it as part of the arrangement. In addition, late-payment interest calculated from the original due date 23 April is added to the amount payable.
You will be notified when your request for payment arrangement has been processed
After your request for payment arrangement has been processed, you will be notified of whether the request was accepted or rejected. If you have asked for your paid-in VAT back, the VAT amount will be returned to you in approximately one week after the request is accepted. If you asked for the use of your refunds to be cancelled, the tax refunds will be paid to you in the same schedule.
Please note that your request for payment arrangement and the related requests concerning your paid-in VAT and tax refunds can only be accepted if
- your company does not have taxes in recovery by enforcement
- your company has filed all the required tax returns and reports to the Incomes Register (earnings payment reports and employer’s separate reports).
In addition, your company may be unqualified to get a payment arrangement if your previous arrangement has lapsed.